MCX tanks 5% on transaction tax on non-agri futures

There is an Union Budget proposal for a transaction tax of 0.01% on non-agri futures traded on commodity exchanges

Shares of commodity bourse MCX today tumbled nearly 5% on the Union Budget proposal for a transaction tax of 0.01% on non-agri futures traded on commodity exchanges.

MCX shares closed 4.51% lower at Rs 1,093.35 on the BSE. Intra-day, the stock tumbled 5.23% to Rs 1,085.05.

At NSE, the scrip ended at Rs 1,093.10, down 4.86% from its previous close.

"The move will, to some extent, discourage investment in commodity futures trading and reduce liquidity. It is feared that it may also divert traders towards unauthorised/illegal trading," said Naveen Mathur, Associate Director Commodities & Currencies, Angel Broking.

The Commodity Transaction Tax (CTT), which is on similar lines as the Securities  Transaction tax (STT), would work out to Rs 10 for transaction worth Rs 1 lakh.

"There is no distinction between derivative trading in the securities markets and derivative trading in commodities markets. Only the underlying asset is different. It is the time to introduce commodity transaction tax in a limited way," Finance Minister P Chidambaram said yesterday while presenting Budget 2013-14 in the Lok Sabha.

"With respect to CTT, the discrimination is glaring between agri and non-agri commodities; which is not the case as regards security transaction tax (STT). This treatment is like having STT on shares of 'Company A' and no STT on 'Company B'," MCX Managing Director and CEO Shreekant Javalgekar had said.

The BSE 30-stock index, Sensex, ended at 18,918.52, up 56.98 points or 0.30%.